Pramukh Metal Quarry Vs ITO (ITAT Ahmedabad)
The appeal before Income Tax Appellate Tribunal, Ahmedabad concerned Assessment Year 2008–09 and arose from an order dated 31 January 2024 passed by the Addl./JCIT(A), Visakhapatnam. The assessee challenged both the legality of the reassessment proceedings initiated under sections 147/148 of the Income Tax Act and multiple disallowances confirmed on merits.
On legality, the assessee contended that the reopening was invalid as it was based on proceedings of another assessment year, amounted to a change of opinion, lacked fresh material indicating escapement of income, and was initiated without mandatory approval under section 151. It was also argued that there was a mismatch between the reasons recorded for reopening and the additions ultimately made, rendering the reassessment order void. Additional grounds were raised challenging rectification proceedings under section 154 read with section 250.
On merits, several disallowances were disputed. First, a disallowance of ₹22,75,000 towards carting and transportation charges paid to a contractor was challenged on the ground that the expenditure was wholly incurred in the course of business, had been fully disclosed, verified, and allowed in the original assessment. The assessee sought deletion of this disallowance.
Secondly, a disallowance of ₹4,799 relating to interest paid on TDS, VAT, and royalty was contested, with the assessee arguing that such interest was compensatory in nature, not penal, and therefore allowable as business expenditure.
